All channel (mass channel + c-stores) e-cig dollar sales growth continued to accelerate sequentially to +24.1% in the period ending May 2, 2015, driven by +57.7% unit growth, partially offset by -21.3% net pricing, Wells Fargo Securities LLC reported, citing the latest Nielsen data.
Though e-cig year-over-year pricing has been negative for 12 consecutive periods, Wells Fargo believes it’s at least partially due to difficulty in capturing SKUs given the rapidly evolving vapor category and proliferation of vapors/tanks/mods (VTM) and refills that tend to have a lower retail price/refill.
“We remain encouraged that category dollar sales continue to grow, driven by Big Tobacco’s national e-cig rollouts and believe the trial and awareness generated by Vuse and MarkTen should help elevate the entire category and drive incremental trial. Importantly, we note that VTMs are under-represented in Nielsen but are growing faster than the vapor category based on our ‘Tobacco Talk’ surveys. While we remain bullish on vapor long-term, we acknowledge some near-term profitability headwinds as companies continue to invest in the category and data remains very difficult to capture and measure,” said Bonnie Herzog, managing director, beverage, tobacco and convenience research. “We continue to believe vapor consumption could surpass combustible cigs in the next decade (by 2025), driving total profit pool growth & generating a 6.6% CAGR.”